THE basic rate of income tax should be raised to help cut Britain’s record deficit, a Sunderland MP has said.

Chris Mullin, Sunderland South MP, told Treasury ministers that slashing public spending is not the only way to deal with the £178bn black hole and suggested putting "a penny or two" on the 20% income tax rate.

His intervention comes just eight days before Chancellor Alistair Darling unveils his pre-election Budget.

Last week Treasury Chief Secretary Liam Byrne said that the Government would not need any further tax rises to meet its commitment to halve the deficit within four years, beyond the £19 billion already announced.

But during Commons question time, Mr Mullin - who is standing down at the general election - said: "Cuts in public spending are not the only way to reduce the deficit - we could, for example, raise the basic rate of income tax. Not as far as it was under Mrs Thatcher but by a penny or two."

Financial Secretary Stephen Timms appeared to reject the suggestion.

He said: "Our view is that those with the highest incomes should bear the largest share of the burden of consolidation, and that’s the reason that we have announced the introduction of the 50p rate of income tax on the highest incomes, and the restriction of personal allowances, also for people with low incomes.

"We think that’s the right place for the consolidation to start."

Mr Byrne has been accused of making a gaffe with his comments that no new tax rises would be needed, having later suggested nothing had been ruled out.

The Treasury has insisted that he was simply reiterating what was set out in last year’s Pre-Budget Report.

The minister repeated that position under questioning from Tory MPs about his remarks.

Mark Lancaster (Milton Keynes North East) said: "Given that last week you did rule out increases to VAT, presumably to curry favour with the Prime Minister and undermine your own Chancellor, can you simply explain to the House when and why you changed your mind?"

Mr Byrne replied: "I have merely set out the statement that was made by the Chancellor at the Pre-Budget Report, which was how we plan to halve the deficit over the next four years: by raising taxes by £19bn - and we will do that in a fair way - unlike the party opposite if they ever got into power - by ensuring that half the taxes we raise fall on the shoulders of the top 5% of earners.

"Alongside that we will cut spending - capital and current spending - by £38bn. That way we will halve the deficit over four years in the way set out by the Fiscal Responsibility Act.

"What we will not do is pursue the approach offered by the party opposite, which is to introduce cuts now and put this economy into a double-dip recession."

But Richard Ottaway (Croydon South) returned to the comments, saying: "When you said last week, ’We don’t see a need to raise VAT’, what exactly did you mean by that?"

Mr Byrne said: "At the risk of repeating myself, we said that over the next four years we will halve the deficit - we have not seen a plan as clear as that from the party opposite - and we said that we would do this in a fair way.

"We said that in part we need to raise taxes and we set out very clearly how £19 billion of taxes needs to be secured alongside spending cuts.

"I hope that over the next week or two we will see a plan of equal clarity from the party opposite."